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ImmunoGen Announces a Global, Multi-Target License Agreement of its Novel Camptothecin ADC Platform to Lilly for Up to $1.7 Billion

On February 15, 2022 ImmunoGen Inc. (Nasdaq: IMGN), a leader in the expanding field of antibody-drug conjugates (ADCs) for the treatment of cancer, reported a global, multi-year definitive licensing agreement whereby it granted Eli Lilly and Company (Lilly) exclusive rights to research, develop, and commercialize ADCs directed to targets selected by Lilly based on ImmunoGen’s novel camptothecin technology (Press release, ImmunoGen, FEB 15, 2022, View Source [SID1234608103]). ImmunoGen retains full rights to the camptothecin platform for all targets not covered by the Lilly license.

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As part of the agreement, Lilly will pay ImmunoGen an upfront payment of $13 million, reflecting initial targets selected by Lilly. Lilly may select a pre-specified number of additional targets, with ImmunoGen eligible to receive an additional $32.5 million in exercise fees if Lilly licenses the full number of targets. ImmunoGen is eligible to receive up to $1.7 billion in potential target program exercise fees and milestone payments based on the achievement of pre-specified development, regulatory, and commercial milestones. ImmunoGen is also eligible for tiered royalties as a percentage of worldwide commercial sales by Lilly. Lilly is responsible for all costs associated with research and development.

Camptothecins are an important class of anticancer drugs targeting Type I topoisomerase. ImmunoGen’s proprietary class of camptothecin linker-payloads are designed to optimize existing camptothecin technology to potentially deliver a wider therapeutic window with enhanced safety and efficacy.

"Lilly has a proven track record of bringing transformative oncology medicines to market, and we are pleased that they selected our novel camptothecin technology to integrate with their efforts to develop next-generation ADCs," said Stacy Coen, ImmunoGen’s Senior Vice President and Chief Business Officer. "This licensing agreement demonstrates ImmunoGen’s continued innovation in ADCs, creates value from our intellectual property around a proprietary platform, and further enhances our ability to re-invest in our business as we build out our pipeline and accelerate our transformation into a fully-integrated oncology company."

Leidos Holdings, Inc. Reports Fourth Quarter and Fiscal Year 2021 Results

On February 15, 2022 Leidos Holdings, Inc. (NYSE: LDOS), a FORTUNE 500 technology, engineering, and science company, reported financial results for the fourth quarter and fiscal year 2021 (Press release, Leidos, FEB 15, 2022, View Source [SID1234608102]).

Roger Krone, Leidos Chairman and Chief Executive Officer, commented: "2021 was a banner year for Leidos, with industry-leading organic revenue growth and expanded profitability. In addition, we enhanced our market presence during the year with strategic acquisitions and investments that added important technical capabilities. Despite the ongoing impact of COVID-19 and an extended Continuing Resolution, we are positioned to grow in 2022, bolstered by our scale, differentiated technical offerings, and dedicated workforce."

As of December 31, 2021, Leidos ended the three-year forecast period laid out at its 2019 Investor Day, exceeding or achieving all financial targets. Over the period, Leidos grew revenues at a compound annual growth rate of 10%, achieved a net income margin of 5.5% and converted 164% of its net income attributable to Leidos stockholders into cash flows from operations. In addition, Leidos grew organically at a compound annual growth rate of 7% (versus 5% target), achieved an adjusted EBITDA margin of 10.8% (versus 10% or greater target) and converted 116% of its adjusted net income into free cash flow (versus 100% or greater target).

Summary Operating Results

Revenues were $3.49 billion for the quarter and $13.74 billion for the year, up 7% and 12% over the comparable 2020 periods, respectively. Excluding acquired revenues of $52 million for the quarter and $325 million for the year, organic revenues increased 6% and 9%, respectively. For the year revenues grew organically across all reportable segments. The largest contributors for the quarter and the year were the increase in veterans’ disability examinations after the pause from the COVID-19 pandemic and the ramp-up of the Navy Next Generation Enterprise Network Recompete (NGEN-R) Service Management, Integration and Transport (SMIT) contract.

Net income was $176 million, or $1.23 per diluted share, for the quarter, and $759 million, or $5.27 per diluted share, for the year. Net income margin for the quarter was 5.0%. The weighted average diluted share count for the quarter was 142 million, compared to 144 million in the prior year quarter. For the year net income and diluted EPS were both up 21% compared to fiscal year 2020. Net income margin for the year increased to 5.5% from 5.1% in fiscal year 2020 as a result of strong program management, higher volumes on certain fixed price programs and $26 million net benefit from an adjustment to legal reserves related to the Mission Support Alliance joint venture recorded in the first quarter of fiscal year 2021.

Adjusted EBITDA was $359 million for the fourth quarter, representing an adjusted EBITDA margin of 10.3%. For the year adjusted EBITDA was $1.51 billion (11.0% margin), up 14% over fiscal year 2020. Non-GAAP net income was $224 million for the quarter and $952 million for the year, which generated non-GAAP diluted EPS of $1.56 for the quarter and $6.62 for the year. For the year non-GAAP net income and non-GAAP diluted EPS were up 13% and 14%, respectively, compared to fiscal year 2020.

Cash Flow Summary

Net cash provided by operating activities for the quarter was $210 million for an operating cash flow conversion ratio of 121%. After adjusting for payments for property, equipment and software, quarterly free cash flow was $177 million for a free cash flow conversion ratio of 80%. For the year net cash provided by operating activities was $1.03 billion (137% conversion) and free cash flow was $927 million (98% conversion).

For the quarter Leidos used $37 million in investing activities and $69 million in financing activities. For the year Leidos used $730 million in investing activities and $113 million in financing activities. On November 22, 2021, Leidos signed a definitive agreement within the Defense Solutions segment to dispose of its Aviation & Missile Solutions LLC ("AMS") business to focus on leading-edge and technologically advanced services, solutions and products. The sales price will be approximately $18 million, subject to certain adjustments, and the sale is expected to be completed during the first quarter of fiscal year 2022.

During fiscal year 2021, Leidos made open market repurchases of common stock for an aggregate purchase price of $237 million and returned $199 million to shareholders as part of its regular quarterly cash dividend program. In addition, Leidos borrowed $380 million, paid down $106 million of debt and completed strategic acquisitions and investments for preliminary purchase consideration of approximately $627 million. As of December 31, 2021, the Company had $727 million in cash and cash equivalents and $5.1 billion in debt.

On February 11, 2022, the Leidos Board of Directors declared that Leidos will pay a cash dividend of $0.36 per share on March 31, 2022, to stockholders of record at the close of business on March 15, 2022. In addition, the Board authorized a stock repurchase program under which Leidos may repurchase up to 20 million shares of its common stock, which supersedes the prior February 2018 share repurchase authorization. Stock repurchases may be made on the open market at prevailing market prices or in privately negotiated transactions including through accelerated share repurchase or derivative transactions, transactions with Leidos retirement and deferred compensation plans, transactions under 10b5-1 plans or 10b-18 plans or any of the foregoing combined or otherwise. Whether repurchases are made and the timing and actual number of shares repurchased depends on a variety of factors including price, corporate capital requirements, other market conditions and regulatory requirements. The repurchase program may be accelerated, suspended, delayed or discontinued at any time.

New Business Awards

Net bookings totaled $3.2 billion in the fourth quarter of fiscal year 2021 and $15.5 billion for fiscal year 2021, representing a book-to-bill ratio of 0.9 and 1.1, respectively. As a result, backlog at the end of fiscal year 2021 was $34.5 billion, of which $7.4 billion was funded. Included in the quarterly bookings were several notable awards:

Air Combat Command Intelligence, Surveillance and Reconnaissance Program. Leidos was awarded a task order by the Air Combat Command (ACC) Acquisition Management and Integration Center (AMIC) to continue its support to ACC intelligence, surveillance and reconnaissance (ISR) operations. Under the contract, Leidos will provide subject matter expertise and threat mitigation support for ACC ISR operations along with a full range of intelligence support and ISR operational services that encompass analysis and assessment support, ISR training support and intelligence support for HQ ACC Staff, subordinate NAF Staffs, Centers and Wings. The single-award, firm-fixed price task order has a one-year base period of performance, four one-year options and a total contract value of up to approximately $531 million if all options are exercised.
Hypersonic Thermal Protection System Capability. Dynetics, a wholly owned subsidiary of Leidos, was awarded a contract to develop Hypersonic Thermal Protection System (TPS) prototypes for the U.S. Army’s Rapid Capabilities and Critical Technologies Office (RCCTO). Under the contract, Dynetics will also support materials research, novel inspection and acceptance efforts. The cost-plus-fixed fee award has a total value of up to $479 million over six years.
Federal Parent Locator Service. Leidos was awarded a new prime contract to continue supporting the Office of Child Support Enforcement (OCSE) within the Department of Health and Human Services, Administration of Children and Families. Under the contract, Leidos will continue to support OCSE’s Federal Parent Locator Service (FPLS) with operations and maintenance, continuation of system development and enhancement, data center operations and a disaster recovery center. The single award contract has a maximum value of $76 million and a period of performance of approximately five years if all options are exercised.
Forward Guidance

Leidos is initiating fiscal year 2022 guidance as specified in the table below.

Measure

A provision of the Tax Cuts and Jobs Act of 2017 went into effect on January 1, 2022, that requires companies to capitalize and amortize research and development costs over five years rather than deducting such costs in the year incurred for tax purposes. The guidance for cash flows provided by operating activities does not take into account the effects of this legislative change, because it assumes that the provision will be deferred, modified or repealed. If the provision remains in effect, Leidos currently estimates that cash flows provided by operating activities would decrease by approximately $150 million in fiscal 2022 and net deferred tax assets would increase by a similar amount. The actual impact on cash flows provided by operating activities will depend on the amount of research and development costs the Company will incur, on whether Congress modifies or repeals this provision and on whether new guidance and interpretive rules are issued by the US Treasury, among other factors.

For information regarding adjusted EBITDA margin and non-GAAP diluted EPS, see the related explanations and reconciliations to GAAP measures included elsewhere in this release.

Leidos does not provide a reconciliation of forward-looking adjusted EBITDA margins or non-GAAP diluted EPS to net income margin or diluted EPS, due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliation. Because certain deductions for non-GAAP exclusions used to calculate projected net income may vary significantly based on actual events, Leidos is not able to forecast on a GAAP basis with reasonable certainty all deductions needed in order to provide a GAAP calculation of projected net income margin, diluted EPS or net income attributable to Leidos shareholders at this time. The amounts of these deductions may be material and, therefore, could result in projected net income margin, net income attributable to Leidos shareholders and diluted EPS being materially less than projected adjusted EBITDA margins and non-GAAP diluted EPS.

Conference Call Information

Leidos management will discuss operations and financial results in an earnings conference call beginning at 8 A.M. eastern time on February 15, 2022. Analysts and institutional investors may participate by dialing +1 (877) 869-3847 (U.S. dial-in) or +1 (201) 689-8261 (international dial-in).

A live audio broadcast of the conference call along with a supplemental presentation will be available to the public through links on the Leidos Investor Relations website (View Source).

After the call concludes, an audio replay can be accessed on the Leidos Investor Relations website or by dialing +1 (877) 660-6853 (toll-free U.S.) or +1 (201) 612-7415 (international) and entering conference ID 13726189.

INOVIO to Report Fourth Quarter and Year-End 2021 Financial Results on March 1, 2022

On February 15, 2022 INOVIO (NASDAQ: INO) reported that fourth quarter 2021 financial results will be released after the market close on March 1, 2022 (Press release, Inovio, FEB 15, 2022, View Source [SID1234608101]). Following the release, INOVIO will host a live conference call and webcast at 4:30 p.m. ET to discuss financial results and provide a general business update.

A live and archived version of the audio presentation will be available online at View Source This is a listen-only event but will include a live Q&A with analysts.

Varian Biopharmaceuticals, Inc., a Precision Oncology Company, to Become Publicly Traded Through a Merger with SPK Acquisition Corp.

On February 14, 2022 Varian Biopharmaceuticals, Inc. ("Varian Bio"), a private, precision oncology company developing novel therapeutics for the treatment of cancer, and SPK Acquisition Corp. ("SPK") (NASDAQ: SPK), a special purpose acquisition company ("SPAC"), reported it has entered into a definitive merger agreement for a business combination that will result in Varian Bio becoming a publicly traded company (Press release, Varian Biopharmaceuticals, FEB 14, 2022, View Source [SID1234633283]). Varian Bio is developing a high-potency, specific atypical protein kinase C iota ("aPKCi") inhibitor that has the potential to be best-in-class as a treatment for various oncology indications with an initial focus on basal cell carcinoma (BCC) and molecularly targeted solid tumors.

Varian Bio is developing rationally designed aPKCi small molecule inhibitor candidate that has been optimized for potency, selectivity and tolerability. aPKCi has been implicated as an oncogene in a number of human cancers, including BCC, cutaneous T-cell lymphoma (CTCL), non-small cell lung cancer (NSCLC), acute myeloid leukemia (AML), colorectal cancer, and pancreatic cancer, among others. aPKCi has also been demonstrated to have a role in allowing the immune system to recognize tumors, recruit immune cells into the area, and ramp up the anti-tumor response to kill cancer cells in the lab by shrinking their tumors. Varian Bio’s leadership team and scientific advisory board has extensive experience in the development of novel cancer therapeutics. including Jeffrey B. Davis, a serial entrepreneur with over two decades of experience in the biotechnology and specialty pharmaceuticals industry, and Jonathan Lewis, M.D., Ph.D., Chairman of Scientific Advisory Board, a surgical oncologist and cancer researcher.

The active pharmaceutical ingredient in VAR-101/102, an aPKCi inhibitor, has demonstrated dose dependent anti-tumor activity in murine and human BCC cell lines, as well as other cancer models. Varian Bio intends to develop VAR-101 in a topical formulation for BCC which has the potential to offer optimal clinical utility in BCC as a surgical neoadjuvant or adjuvant therapy. VAR-102, an oral formulation of the active aPKCi inhibitor, lends itself to broader applications in multiple tumor types. Varian Bio believes that VAR-101 and VAR-102, if approved, could represent significant medical and commercial opportunities.

Varian Bio – Developing A Portfolio of aPKCi Inhibitors from Cancer Research UK ("CRUK"), the World’s Largest Independent Funder of Cancer Research (www.cancerresearchuk.org)

Cancer is a global issue, the burden worldwide is on the rise, with almost 20 million new cases diagnosed in 2020 globally and approximately 30 million new cases projected for 2040. The Varian Bio portfolio of novel aPKCi inhibitors have been discovered and developed by CRUK. This has been under the leadership of Prof. Peter Parker, Ph.D., FRS. of the Francis Crick Institute, Kings College, and Cancer Research UK, with collaborators in the UK and US. Prof. Parker is widely regarded as one of the world’s leading scientific experts and investigators of the molecular and cell biology of Protein Kinase C in mammalian biology and cancer.

"We are studying cellular signals in great detail, focusing on molecules called kinases that relay messages within cells. There are more than 500 different kinases, each with a particular role, and many of them work together to form complex networks of signals that control cell growth, proliferation, death, movement and much more. Our work concentrates on a group of kinases known as the protein kinase C (PKC) family, which have been implicated in many types of cancer, stated Prof. Peter Parker, PhD, FRS, Emeritus Group Leader, Francis Crick Institute, Centre Director, Cancer Research UK, King’s College London and a member of the Varian Scientific Advisory Board. "We have investigated how these kinases work in healthy cells, as well as how faults or aberrant activation of kinases from the PKC family drive cancer cells to grow and spread through the body. We are using our findings to help patients by developing drugs that target PKC family members and take them forward into clinical trials."

"Based on the rigorous science of the Parker lab and the Cancer Research UK network, a well-developed molecular, cellular and non-clinical data package for Varian Bio’s drug candidates portends a high probability of clinical and biomarker signals in various cancer types," stated Jonathan Lewis, M.D., Ph.D., Chief Medical Officer and Chairman of the Scientific Advisory Board of Varian Bio. "We have assembled, and will continue to expand, a global team of leading scientific and oncology deep-domain experts as team members while we progress to first-in-human clinical trials."

Varian Bio, together with its collaborators, is initially developing two formulations of its lead aPKCi inhibitor that has been selected for potency, selectivity, biomarker activity and low toxicity in murine and large animal models.

VAR-101 is a dermatologic gel formulation of for the potential topical treatment Basal Cell Carcinoma (BCC). BCC is the most common human cancer in the World. There are 4.3 million cases of BCC diagnosed in the US each year, more than one million of whom undergo Mohs surgery. While Mohs has a low recurrence rate, the surgical approach is costly, time consuming, and can be disfiguring, requiring complex reconstructive surgery. Mohs surgery is the 5th most expensive and costly cancer treatment for Medicare in the United States. The active aPKCi inhibitor (VAR-101) has demonstrated dose-dependent in vitro BCC cell killing with concordant biomarker Gli-1 mRNA knockdown (dose dependent reduction). Gli-1 is present in BCC, but not normal basal cells and increases in hedgehog pathway inhibition resistance.

VAR-102 is an oral formulation of the aPKCi inhibitor for the potential treatment of multiple solid tumors, including non-small cell lung cancer, pancreatic, colorectal and other tumor types. An increasing body of scientific evidence implicates aPKCi as playing a central role in cancer cell growth and metastasis. Varian will pursue systemic tumor indications in a "basket" solid tumor Phase 1 trial. Molecular targeting and target engagement will be measured with associated biomarker exploration.
Precision oncology, whereby physicians use genomic, proteomic and phosphorylationomic testing to look for specific unique functional mutations and molecular pathways of tumors, holds the promise of much more targeted treatment recommendations with therapies designed to fight specific tumor types. A recently published global Precision Oncology Market analysis by Reports and Data found the global precision oncology market size amounted to US$49.9 billion in 2019 and is expected to grow at a CAGR of 9.9% over the next eight years to reach US$99.7 billion in 2027. Protein kinases are enzymes that are involved in various cellular functions including metabolism, cell cycle regulation, survival and differentiation. Dysregulation of protein kinases is implicated in the initiation of cancer formation, or carcinogenesis. Protein kinase inhibition in cancer therapy has led to a paradigm shift in how cancer is treated, and over 35 protein kinase inhibitors have been approved by the US FDA over the past two decades (Source: Expert Rev Anticancer Ther. 2018 Dec; 18(12): 1249-170).

Management Comments

"Targeted, small-molecule protein kinase inhibitors have been one of the most clinically successful classes of cancer drugs over the past 20 years, and we are excited by the opportunity to progress our novel candidates towards human clinical trials," says Jeffrey B. Davis, Varian Bio’s CEO. "Varian Bio has the support of leading cancer physicians and scientific institutions both in the US and abroad, and aPKCi is a unique protein kinase target whose inhibition could have a significant impact in a broad range of tumor types. Our merger with SPK will provide the capital needed to further the development of our proprietary, anti-cancer targeted therapies."

"Varian Bio represents an opportunity to advance novel anti-cancer therapeutics to address a broad range of potential tumor types, in large and growing global indications such as basal cell carcinoma and non-small cell lung cancer," said Sophie Ye Tao, CEO of SPK Acquisition Corp. "This transaction will provide the Varian Bio management team and Board of Scientific Advisors the financial resources to continue to innovate, to develop its lead drug candidates, and bring its novel therapies to fruition."

Transaction Overview

Pursuant to the merger agreement, Varian Bio will merge with a wholly owned subsidiary of SPK, with Varian Bio being the surviving entity of the merger and a wholly owned subsidiary of SPK. SPK, which currently holds approximately $50 million in gross proceeds from the trust account, will be renamed Varian Biopharma, Inc. following the merger. The cash proceeds from the transactions are expected to fund manufacturing, pre-clinical and IND-enabling toxicology studies, and "first-in-human" human clinical studies for an aPKCi inhibitor. This will include the continued development of VAR-101, a topical formulation of its lead aPKCi compound, for the treatment of BCC, and the development of VAR-102, an oral formulation thereof, for the treatment of solid malignancies. Following the closing of the transaction, the Company will be led by existing management from Varian Bio, including CEO Jeffrey B. Davis and CMO Dr. Jonathan Lewis.

The transaction has been approved by the Boards of Directors of both SPK and Varian Bio and is subject to the satisfaction of customary closing conditions, including the approval of SPK’s shareholders. The transaction is expected to close in the second quarter of 2022.

Additional information about the proposed business combination, including a copy of the merger agreement and investor presentation, will be provided in a Current Report on Form 8-K to be filed by SPK with the Securities and Exchange Commission (the "SEC") and available at www.sec.gov. In addition, SPK Acquisition Corp intends to file a registration statement on Form S-4 with the SEC, which will include a proxy statement/prospectus, and will file other documents regarding the proposed transaction with the SEC.

Advisors

LifeSci Capital is acting as financial and capital markets advisor to SPK
Loeb & Loeb LLP is acting as legal counsel to SPK
Dorsey & Whitney LLP is acting as legal counsel to Varian Bio

Oxilio Limited announces commencement of the clinical evaluation of its first novel formulation of OXL001 in partnership with TRx Biosciences

On February 14, 2022 Oxilio, a pioneering drug development company repurposing existing drugs to address unmet needs in cancer treatment, reported that following successful formulation development it has commenced work on the clinical evaluation of its first novel formulation of OXL001 (Press release, Oxilio, FEB 14, 2022, View Source [SID1234621598]).

Oxilio signed a research agreement with TRx Biosciences in January 2021, to evaluate the performance of TRx Biosciences’ technology platform within Oxilio’s OXL001 programme. The TRx Biosciences technology offers the potential to address bioavailability and pharmacokinetic challenges in achieving and maintaining efficacious exposure whilst enhancing tumour uptake to maximise the utility of OXL001’s pharmacology.

As a result of successful formulation optimisation and encouraging preclinical evaluation, Oxilio and TRx Biosciences have begun work on the first human study for the clinical evaluation of the novel formulation of OXL001. It is anticipated that the first subject will be dosed later in 2022, with the study concluding by the end of the year.

Oxilio Limited Co-founder and Director, Dr Simon Yaxley said "Together with our colleagues at TRx Biosciences, we are excited and encouraged by what we have been able to achieve in formulation optimisation which has led to significant pharmacokinetic improvements in preclinical models. We look forward to taking this science forward into the clinic later this year which, if successful, offers tremendous near-term potential benefit to cancer patients.

TRx Biosciences Co-founder and CEO, Dr Robin Bannister said "Our work with Oxilio has enabled us to rapidly establish our underlying technology, both in terms of pharmacokinetics and pharmacodynamics and we are delighted to see the progression of OXL001 towards clinic, given its immense potential as a pan-cancer therapy. We will continue to closely support Oxilio throughout its clinical development activities, which will be equally transformative for TRx as the first clinical validation of our targeted oral delivery platform."